United were leading the race to land the Spanish international, but reports now claim Chelsea have agreed a £22million deal with Barcelona for the winger.
Hamann reckson United have made a big mistake by failing to sign the winger.
“Van Gaal will be going off his head. To snatch Pedro from Manchester United for Chelsea is a major coup,” Hamann told talkSPORT.
“I think Van Gaal won’t be happy at all because they’ve got the money to spend, they’ve brought a lot of players in but for what they’ve spent I still think they haven’t progressed enough and they need more.
“We don’t know what the stumbling block was, whether it was the player’s wages or the transfer fee. But you’ve got to say they look very foolish because it looked like over the last few days it was going to be a matter of when, not if.
“For Pedro to join Chelsea against all the odds make them look a bit foolish.”